There’s a good post on GigaOM talking about the true definition of SaaS. Alistair points out:

“Everyone’s on the software-as-a-service bandwagon … But not every company that calls itself SaaS deserves the title.

One branch of the on-demand evolutionary tree is what I’d call (at the risk of yet another unfortunate acronym) peripheral-as-a-service. As we move from a desktop to a mobile client, we’re unplugging familiar devices. And they’re all getting plugged back into the cloud.”

I agree that there are too many people are branding their application as SaaS because it’s trendy. When we were coming up with this blog, we didn’t want to blog about every other meToo.com Web 2.0 company. So we decided to come up with our own definition of a SaaS company and stick to it.

In my mind, a SaaS application is software that previously required the user to install it on their own computer or server. Taking the client applications that were delivered on CDs but now delivering them through the Internet. So let’s say we have an On-Demand version of iTunes that would manage all my music and function as a media player. To me that’s a SaaSy app. It’s allowing me to access the functionality of the software without installing anything on my computer. Even though I need to upload all of my music I don’t see it as an online hard drive or peripheral. It’s the same thing when you get your Salesforce account for the first time and you need to upload all your contacts. The music is your data just like your contacts.

Is Amazon SaaS? Not in my opinion. It’s a store, plain and simple. Ok Ok, granted we’re not talking about Amazon the Web Service.

So is Ebay SaaS? Again, not in my eyes. Such a client application would not be useful if it was only installed on one person’s computer. It will always be an online marketplace; not virtualized software.